2022 (5) TMI 779 - HC - Income Tax

Reopening of assessment u/s 147 - Scope of Section 148A as newly inserted - Comparison between old and new provisions for reassessment - Individual identity of Section 148 as prevailing prior to amendment - applicability of the newly inserted provisions of Section 148A and the amendments brought inter alia w.e.f. 1.4.2021 - identity of Section 148 as prevailing prior to amendment and insertion of section 148A - Whether after introduction of new provisions for reassessment of income by virtue of the Finance Act 2021 with effect from 01.04.2021 substituting the then existing provisions would the substituted provisions survive and could be used for issuing notices for reassessment for the past period? - HELD THAT - As relying on SUDESH TANEJA WIFE OF SHRI CP TANEJA 2022 (1) TMI 1212 - RAJASTHAN HIGH COURT no notice under Section 148 would be issued for the past assessment years by resorting to the larger period of limitation prescribed in newly substituted clause (b) of Section 149(1). This would indicate that the notice that would be issued after 01.04.2021 would be in terms of the substituted Section 149(1) but without breaching the upper time limit provided in the original Section 149(1) which stood substituted. Under no circumstances the extended period available in clause (b) of sub-section (1) of Section 149 which we may recall now stands at 10 years instead of 6 years previously available with the revenue can be pressed in service for reopening assessments for the past period. This flows from the plain meaning of the first proviso to sub-section (1) of Section 149. In plain terms a notice which had become time barred prior to 01.04.2021 as per the then prevailing provisions would not be revived by virtue of the application of Section 149(1)(b) effective from 01.04.2021. All the notices issued in the present cases are after 01.04.2021 and have been issued without following the procedure contained in Section 148A of the Act and are therefore invalid. By virtue of notifications dated 31.03.2021 and 01.04.2021 issued by CBDT substitution of reassessment provisions framed under the Finance Act 2021 were not deferred nor could they have been deferred. The date of such amendments coming into effect remained 01.04.2021. In the result we find that the notices impugned in the respective petitions are invalid and bad in law. The same are quashed and set aside. The learned Single Judge committed no error in quashing these notices. All the writ petitions are allowed. Appeals of the revenue are dismissed.

Summary

Issues:
Challenge to notice of re-assessment for the assessment year 2016-17 based on recent judgment regarding provisions of reassessment under the Finance Act, 2021 and the validity of explanations in notifications issued by the CBDT.

Analysis:
The petitioner challenged a notice of re-assessment for the assessment year 2016-17, citing a recent Division Bench judgment regarding provisions of reassessment under the Finance Act, 2021. The judgment highlighted the major changes in reassessment provisions, emphasizing the necessity of following the new scheme introduced under Section 148A of the Act. It clarified that the new scheme of reopening assessments applies to notices issued after 01.04.2021, with specific time limits and procedures outlined under the Finance Act, 2021. The judgment concluded that all notices issued post 01.04.2021 must adhere to the newly introduced provisions and that extended time limits cannot be used to reopen assessments for past periods.

The second issue raised was the validity of explanations in notifications issued by the CBDT, specifically dated 31.03.2021 and 27.04.2021. The judgment referred to legal principles regarding the constitutionality of statutes and delegated legislation. It emphasized that subordinate legislation, such as the explanations provided in the notifications, must align with the powers vested by the parent Act. The court found that the explanations introduced by the CBDT in the notifications exceeded its jurisdiction as subordinate legislation, as they attempted to alter the statutory provisions and were declared unconstitutional and invalid.

The judgment further discussed the views of different High Courts on the matter, noting that several courts had taken a similar stance on the issue of validity of notices of re-assessment. It highlighted the importance of adhering to the statutory provisions and the clear interpretation of the law, emphasizing that notifications could not alter the basis of statutory provisions. Ultimately, the court quashed the impugned notices, declaring them invalid and bad in law, in line with the recent Division Bench judgment and the principles of statutory interpretation and constitutional validity.